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Alpine Property market report, July COVID edition!

This is my third market report since the start of the COVID crisis. Right now we have returned to some sort of normality. The mountains and lakes were the first to have restrictions lifted (May 11th) then cafe’s, bars, restaurants and hotels opened. Now pools, ski lifts and shops are open too. The border with Switzerland has been open since June 15th.

There are restrictions in place. You have to book to go to the pool, all shops have to provide a sanitising station on the way in. Most are asking that you wear a mask. Some insist some don’t. It’s a 50/50 thing around here. I’ve eaten out a few times but always sat outside. You are generally required to wear a mask as you move around a premises but it’s not required at a table. It’s always table service too. Order and pay whilst seated. As I write this some of the protocols are being adapted. One of the local pools has given up with the booking system because so few people came. So now it’s first come first served.

We’ve been keeping an eye on the flights in and out of Geneva airport. At the worst point, there was literally only a handful of passengers coming in and out. By the beginning of July that was up in the hundreds. As I write this there are about 100 flights a day coming in and out. However, that is still only a third of what they are used to.

The number of tourists in our Alpine villages has shot up this weekend. This is the week of the “quatorze Juillet“, traditionally the start of the holidays in France, and the French are making the most of a “Staycation” (it’s the same word in French), many British second homeowners are arriving by car, far fewer by aeroplane. Self-catering bookings are good. Most of the British tourists have cancelled but their place has been taken by the French.

I wrote the first report back in mid-April, you can read it here. Coronavirus COVID-19 and your Property in the Alps. Back then everything had come to a halt, the Gendarmerie were on patrol and we could only leave our homes briefly and with the correct paperwork. We carried on working from home (no change there for Alpine Property) but we could only guess what the future held.

I wrote the second report at the end of May. How is COVID affecting property prices in the Alps? At this point, we were caught between two realities. Many of the sales we had “in process” so pre-COVID sales were struggling because the buyers feared for their future and didn’t want to take on extra risk. They were either trying to reduce the price of the property they had already agreed or were looking for a way out. On the other hand, we were feeling a very significant pressure from new post-COVID buyers. New enquiries were back to normal. I wrote this market report to try and provide some facts and figures to attempt to shore up some of our crumbling sales.

This third report that I am writing (July/12) is more of the same. We have just seen a record-breaking number of enquiries in June and we are heading the same direction in July. I reported 16 agreed sales at the end of May, that number has now doubled. The average sale price and average offer prices remain the same. The only slight change is that the Francophone buyer is in the ascendancy. I say Francophone because some of them live in the UK! We have seen about 30% of our “pre-COVID” sales fall through which obviously leads to all sorts of heartache for all involved, however many of these failed sales are being quickly rescued with new post-COVID customers. It would be great to think that this is only the experience of Alpine Property. However it never works like that, I have heard similar reports from many other agents in our area.

It’s not just in the Alps either. There is a similar effect being reported in the UK, I also heard an off-the-record report from a very good source that new enquiries in June in one UK sector are easily 50% higher than usual. And that was before the announcement of a higher stamp duty ceiling!

So what of the future? We can’t be complacent. I for one appreciate the strong “confinement”, it has really brought the numbers right down in France. Of course, the numbers will go up. That is inevitable. We just hope the current measures are sufficient to keep enough of a lid on it. As far as our property market goes, the bottom line is, the French Alps is a fantastic place to live or take a holiday and that won’t change. We can’t imagine going back to another country-wide confinement. But then again, we could never have imagined being confined in the first place! I’d never have guessed we’d have carried on doing the same levels of business as usual. With that in mind, I don’t think I can make any predictions for the future!

How is COVID affecting property prices in the Alps?

Contrary to the received wisdom in the media we are not seeing a drop in demand or a reduction in prices for property in the Alps.

The popular press is predicting a drop in prices. We won’t list the articles on this subject. They certainly play well to our assumptions. And if you are in the market for a property, it plays well to your hopes! However, it is not our experience on the ground.

If you don’t have time to read on, then I will summarise our findings here. These are based on our historical record that goes back 20 years. We have increased activity on our website, and so far this month we have almost record numbers of enquiries. I say “almost” because as I write this, the month is not finished. But on the performance so far, enquiries for May 2020 could break our record. And since the beginning of our confinement, we have agreed 16 sales. Our prediction during this confinement would have been zero sales! The ratio of agreed prices to asking prices is minus 3.7%. Based on previous experience that is completely normal. Unless the property is new to the market and there seems to be other interest people will often make a lower offer than the asking price.

I’ll breakdown our 16 agreed sales here.

  • Average property price 422,750€
  • Agreed offer on average 3.7% lower than asking price.
  • Ranging from 62.000€ to 1.595m€
  • 8 Anglophone buyers (based in the UK or elsewhere)
  • 7 Francophone (mostly based in France)
  • 1 Finn

There are 2 distinguishing features of these buyers

  • 80% of them are new to us this year. Normally that would be about 50%, many of our customers spend some time looking for a property.
  • Most of them don’t need a mortgage, and therefore don’t need rental to help pay for the purchase. In fact, less than half of them see a rental return as important.

At the moment we are experiencing two types of buyers

  • Buyers in the middle of a purchase. Something they might have started last year, a long term project, they have signed the first contract and would normally be finalising the purchase at this point. COVID has destabilised these sales. The world they knew before they made the decision to buy has changed, and they are not sure about the future. Many of them are having second thoughts. Sometimes forced upon them by financial worries. Inevitably some of our sales agreed before COVID will falter and the properties will return to the market.
  • New buyers, buyers who have had the dream of an Alpine home for a while and have made the decision to take the plunge during this crisis. These sales may well be more secure. As far as these purchasers go, the world situation can only improve (and seems to be doing so).

So what is the main motivation of these new buyers? Some have suggested that they are looking for a lock-down bolthole. We don’t think that is the case. Travelling during the lockdown to a second home has been outlawed. Most (but not all!) have remained at their principal residence. We get the feeling that these “new” customers are reevaluating their lives and priorities. They are taking the opportunity to follow a dream. When you think of your own situation you might be able to emphasise with a reset of what your own aims and objectives are!

If you are interested you can see the list of properties we have recently sold on our “SOLD” property page. This is somewhat old news though. Contact us if you would like a more detailed breakdown of our sales.

Some editorial in French Property News

We got featured twice in French Property News last month (February 2017).  Once in the “Ask the agent” feature and also a couple of properties in their “On the Market” page.

Click on the links to see the articles. We are in March’s issue too, but you’ll have to buy that to see the article (any good Newsagent or from their website) or wait until next month when I’ll publish it here.

In the “ask the agent” bit I think they caught me at a bit of a low moment just before it snowed in January! Now we’ve got some snow the response would be more positive !

“interest has picked up again, and the buyers in the market are serious. In fact the ratio of buyers to browsers is as good as it gets. Couple that with a willingness from the sellers to negotiate a little and the market is ticking along fine”.

ask the agent

 

on the market

 

St Gervais market report

Sarah Watts covers Les Contamines for us but knows St Gervais well. She has just written this market report for a customer. Prices have been broadly stable in St Gervais since 2008. Currently the price advertised is rarely the price paid so, if you see something that seems much too high, it’s likely to be due to an unrealistic valuation or vendor who is not willing to accept the current market conditions, and it is unlikely to be selling.

St Gervais in winter

According to meilleursagents the average price of an apartment in St Gervais is between 2317€ to 4742€ per metre squared, with the average sale being around €3 493 per m2. These figures seem out of touch with reality to me. For a property close to the ski lift that is new or in good condition this price could easily be closer to 4,900€/m2 and good quality new build properties can be more than that.

A chalet would be around the 5500-6000E per m2 for something nice. The prices are very dependant on the quality of finish, there is plenty of property on the market that is feeling quite “tired” by today’s standards.

We have 3 sales going though at the moment in St Gervais. The agreed prices were between 2% and 10% below the asking price. We have just had an offer accepted this week on a 4th property at asking price.

Should you be looking for a 3/ 4 bedroom apartment, you are looking at somewhere around 350-450K. For a chalet in good condition – 650-750K, and a chalet that needs refreshing around 500K.

Property prices vary enormously depending on how close it is to the skiing or at the very least the bus route, the amount of sun, views, outside space and condition. People are often concerned about buying outside of the very centre of the town in case it is “unrentable”. As I often point out, unless you are walking distance in ski boots from the lift (probably a 300m max, you’ll end up taking the car and parking at the free lift car park there for the day. Consequently, if you drive 3 minutes or 6 minutes at the end of the day, it won’t much difference.

I have also personally rented for many years in the past and the fact the property was 3km from town and the skiing, was not an issue. What did make a difference was the garden space. If you get a traditional ski apartment, then it will rent well in the winter, but not in summer if there is no outside space. Some people want to be close to the centre of the village (again more useful in the summer),  Bettex for example is favoured by the skiers because of it’s proximity to the slopes in winter.

Train St Gervais

Nearly all people renting will cover their running costs of the apartment and maybe even make a little profit. You can rent comfortably 8-10 wks in winter and, with an outside space, about 4 weeks in summer.

If you would like to get an idea of rental values  take a look at this website holidayinalps.com for some ideas of what rents and for how much. As a guide, for a 5 bedroom high-end chalet this could earn upwards of 35K€ per year gross income. A more modest 3 bedroom ski apartment would be around 15K€ per year.

In terms of suggestions for 3+ bedrooms, I would recommend

Apartment Lumen http://www.alpine-property.com/index.php?page=prop_3_aptlumen

Apartment Crespin http://www.alpine-property.com/index.php?page=prop_3_aptcrespin

We have also extensively written about the area on our area guide here, scroll down for St Gervais info on each of the pages: http://www.alpine-property.com/index.php?page=page461

Finally, remember that on all property a notaire (stamp duty + solicitor fee) is due. This is 7% for older property and 2.5% for new build from a developer (the first figure will increase slightly Q2 2014).

The general feeling is that the market has turned a corner and the prices will not fall from here.

We have just launched the La Comtesse apartments on our website. They are located in the very centre of St Gervais village and will benefit from 2.5% fees.

Appt. La Comtesse, #1, 1 bedroom and 189 000€

Appt. La Comtesse, #2, 3 bedrooms and 395 000€ 

Appt. La Comtesse, #4, 3 bedrooms and 415 000€

Appt. La Comtesse, #6, 5 bedrooms and 650 000€